Aerocities in India: Catalysts for a New Era of Urban and Real Estate Growth

Urban India is witnessing a transformative phenomenon known as Aerocities. These business districts, strategically developed around airports, are becoming the new urban lifestyle centers. A recent report by 360 Realtors in partnership with Axon Developers reveals that India has nine Aerocity projects spread over 14,000 acres of land, highlighting the scale and ambition of this urban revolution. Aerocities not only enhance the economic landscape but also redefine urban living by integrating business, hospitality, and lifestyle amenities in a seamless manner.

International Inspiration and Early Developments

In the 2000s, the concept of Aerocities first appeared internationally as self-sustaining urban ecosystems near airports in Singapore, Kuala Lumpur, London, Dallas, and Dubai. These vibrant business districts started evolving as parallel Central Business Districts (CBDs), defining new contours of urban growth. The success of these international Aerocities inspired similar developments in India.

In 2010, India saw its first Aerocity around Indira Gandhi International Airport during the Commonwealth Games. Spread across 200 acres, it has become one of the most sought-after neighborhoods in the National Capital Region (NCR), comparable to Cyber Hub, Golf Course Road, and Vasant Kunj. The GMR Aerocity is home to over 15 premium hotels and more than 100 leading F&B enterprises, along with various lifestyle stores, high streets, and specialty stores. GMR is also developing other upscale Aerocities in Hyderabad (1500 acres) and MOPA (232 acres).

Operational and Upcoming Aerocity Projects in India

Close to 22% or 3050 acres of Aerocity land is operational in India, which includes Aerocities in Delhi, Hyderabad, Mohali, and Durgapur. Around 18% or 2585 acres of Aerocity land is under development and is expected to enter the market supply soon. Some of the under-construction projects include 150 acres near the newly-inaugurated Valmiki International Airport in Ayodhya, a 463-acre mixed-use project near Devanahalli Airport, and a 172-acre Aerocity project near Jewar Airport, which is slated to open soon. Work is progressing rapidly on the 740-acre Aerocity project near the Navi Mumbai International Airport, developed by Adani in partnership with CIDCO.

The Uttar Pradesh government is also contemplating building a 1500-acre cityside development near Lucknow Airport. These projects highlight the rapid pace at which Aerocities are being developed and their potential to transform urban landscapes across the country.

Aerocities as Modern Urban Hubs

Initially designed as commercial transit hubs catering to domestic and international passengers, Aerocities have evolved into fully functional commercial suburbs comprising upscale hotels, posh retail stores, F&B outlets, and high-class office complexes. They have become go-to spots for both travelers and affluent urban dwellers. These developments also include logistic parks, business parks, and e-commerce warehousing, operating as commercial catchments. "Aerocities offer a conducive but relaxed atmosphere for business networking, exchange of ideas, and semi-formal hangouts, becoming very popular among established businesses and startups alike," says Ankit Kansal, MD of 360 Realtors.

Business and Corporate Interest

Aerocities can range from 200 to 1500 acres around the airport region, typically 1-3 km from the main airport premises. Business houses, corporates, and MNCs are keen to set up their head offices or regional offices in Aerocities. Not only do they save on travel costs, but they also provide businesses access to top-tier talent. The trend of setting up offices in Aerocities is growing as they offer a conducive environment for business operations. The strategic location near airports ensures ease of connectivity and logistics, which is a significant advantage for businesses.

Shift Towards Non-Aeronautical Revenues

There is a growing shift towards Non-Aeronautical Revenues (NAR) among airport operators. Developing and operating airports require huge investments, and relying solely on passenger fees, airline fees, and parking charges is insufficient. Therefore, airport developers and operators are actively venturing into various potential areas such as F&B, lifestyle, hospitality, destination marketing, and real estate to build new revenue streams. The pandemic has reinforced the importance of diversifying revenue streams into viable alternatives. Globally, the share of NAR is close to 60%. In India, it is still low, except for larger airports such as Delhi (60%) and Mumbai (55%). In smaller airports, it is limited to around 15-20%. However, this trend is changing, and Aerocities are set to play a pivotal role as they offer lucrative real estate opportunities.

Hospitality Industry Boom

Aerocities are also a bustling ground for the hospitality industry, with a growing concentration of luxury hotels, upscale hotels, corporate guest houses, long-term rental projects, and serviced apartments. According to data from 360 Realtors, total branded rooms in Aerocities are pegged at around 5500. By 2030, this number is expected to reach approximately 12,000, growing at a compound annual growth rate (CAGR) of 16.9%.

Delhi Aerocity alone boasts around 4,000 rooms with an extensive pipeline of about 3,000 additional rooms. In Bangalore Aerocity, there is a pipeline of approximately 2,500 rooms. In Hyderabad Aerocity, a 290-room Novotel hotel is operational, and Boston Living is building a 1500-bed premium co-living space in the region. Once fully completed, Hyderabad Aerocity will be one of the largest real estate projects in India.

Future Prospects and Economic Impact

The rise of Aerocities in India marks a significant shift in the country's urban development landscape. These modern urban centers, strategically located around airports, are set to redefine the future of real estate and business in India. They offer immense potential for economic growth, job creation, and urban development. By attracting businesses, investors, and tourists, Aerocities are poised to become the new hubs of economic activity in India.

The development of Aerocities is also expected to have a positive impact on surrounding areas. Improved infrastructure, increased connectivity, and the influx of businesses and residents can lead to the overall development of these regions. Additionally, the focus on sustainability and modern urban planning in Aerocity projects can set new standards for future urban developments in India.

Conclusion

Aerocities represent a new era of urban development in India. Their strategic location, modern infrastructure, and comprehensive urban planning make them attractive to businesses, residents, and investors alike. As these projects continue to develop and expand, they are set to play a crucial role in shaping the future of Indian cities and the real estate market. The success of Aerocities can serve as a model for other urban development projects, driving growth and innovation across the country.